Gold prices remained largely unchanged on Monday as investors eagerly awaited a series of Federal Reserve speeches and testimonies throughout the week to gain insight into monetary policy. In contrast, copper experienced a decline as investors cashed in on recent profits.
Trading volumes in the metal markets were expected to be low on Monday due to a U.S. market holiday, while the anticipation of forthcoming testimonies by prominent Fed officials, particularly Chair Jerome Powell later in the week, was expected to discourage significant market speculation.
Gold remains rangebound as focus shifts to Fed
At 21:05 ET (01:05 GMT), spot gold maintained its stability at $1,957.88 per ounce, while gold futures witnessed a slight decrease of 0.1% to $1,971.20 per ounce.
Both gold contracts remained within a narrow trading range observed over the past month, influenced by mixed signals regarding the direction of U.S. monetary policy, which has predominantly dictated the trajectory of gold prices over the past year.
Although the Fed temporarily halted its cycle of interest rate hikes for the first time in over a year last week, the bank cautioned that there is a possibility of at least two more hikes in the coming months, potentially diminishing the prospects of a gold price recovery.
Increased interest rates weigh on gold prices by elevating the opportunity cost of holding non-yielding assets. Despite the dollar’s decline following the Fed’s decision last week, gold received limited support.
Currently, market expectations reflect a 25 basis point increase by the Fed in July, given that inflation continues to trend significantly above the central bank’s annual target of 2%.
A testimony scheduled before Congress by Fed Chair Powell on Wednesday is anticipated to provide further indications regarding monetary policy, while several other Fed officials are also scheduled to deliver speeches throughout the week.
Following three weeks of substantial growth, copper prices retreated on Monday as traders decided to secure recent profits. Moreover, market sentiment was affected by doubts surrounding China’s economic recovery.
Copper futures witnessed a 0.5% decline, settling at $3.8753 per pound, after a surge of up to 5% over the past three weeks. This notable rebound was primarily driven by traders who entered the copper market after prices plummeted to six-month lows in May.
Worries about Chinese demand persisted as various major investment banks revised down their gross domestic product forecasts for the country. They cited a slower-than-expected economic recovery, despite the lifting of anti-COVID measures earlier this year, as the reason behind their downward revisions.
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